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Value Singapore Developers In Malaysia

Construction logoSome 49 companies listed on the Singapore Stock Exchange have said that more than a quarter of their revenues come from Malaysia. I’m surprised that there are not more, given that that Malaysia, whose economy is growing at 6% a year, is right next door to us here in Singapore.

Wing Tai Holdings (SGX: W05) is one such company. It develops and manages properties in Malaysia, Singapore, Hong Kong and China. It also deals in hospitality management and shopping malls in Asia with leisure facilities, otherwise known as “lifestyle retailing”.

Wing Tai Holdings, is valued at just half its book value and trades at around four times earnings. That looks ostensibly cheap. But there’s more. Its dividend yield is an ultra-generous 6%.

Looking at the company’s income statement reveals that Wing Tai is growing both top-line revenues and bottom-line profits. The property developer could be of interest to income, growth and value investors.

Another company in the real estate sector is United Overseas Australia (SGX: EH5). It focusses on land development and the resale of middle and high-end residential properties and commercial properties primarily in Malaysia.

In common with Wing Tai, United Overseas Australia has seen growth in both its top and bottom lines, albeit it at a more moderate pace. Currently its price-to-book and PE ratio are 0.7 and 6.2, respectively.

On those two measures, United Overseas Australia lags Wing Tai. But where it does have a slight edge is in the balance sheet – Unite Overseas Australia has cash rather than debt. That said, Wing Tai’s debt is hardly burdensome. Its income comfortably covers the interest payments several times over.

Exactly why Wing Tai and United Overseas Australia are value shares is interesting. Both deal in property, which is an area that many investors are suffering from a bout of cold feet over. So, the key question is what do you think will happen to the property markets and how will it affect the two businesses, if at all?

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.